Welcome to the Telenor Sweden Broadband and TV update conference call. At this time, I would like to turn the conference over to Mr. Helge Øien, Investor Relations Manager, Telenor. Please go ahead.
Hi, good morning, everyone, and thank you for taking time to join us this morning. We have organized this call because we have seen a kind of increasing interest in the Swedish fixed market. So we decided that this was a good opportunity to have Mats Lundquist, the head of broadband and TV in Sweden, to give our view on the Swedish fixed market and also some color on what our strategy is in the market. So, Mats is sitting in Stockholm, ready to run through a presentation that we've shared with you. If you don't have the slides, they are also available online at our web pages under the financial calendar.
Mats will do a 25-minute presentation, and then we'll open up for Q&A at the end. So then I hand over to you, Mats.
Thank you very much. I will take you through a brief introduction to start with on Telenor Sweden, but with a focus on consumer fixed, and then turn over to a market overview, presenting our perspectives on some important trends on the Swedish structure of the fixed market. And then concluding with the strategic focus that we have on consumer fixed. But very briefly, the Swedish fixed market is quite advanced, with a very good infrastructure in fiber. And we see strong growth in high-speed broadband, but also some recent consolidation, where Telenor has taken part in that consolidation and improved the market position. And we have our focus on the integration of Tele2 currently.
But going to the first slide with the focus areas for Telenor Sweden in total. First of all, we have, since a couple of years back, been improving our customer experience and have a long-term target to be the industry leader in NPS. Second of all, monetizing mobile data, offer a successful change from voice to data pricing. And the third priority, and that's where I'm gonna spend the time today, is how we've been strengthening our fixed triple play position, both through acquisitions and organic sales. And finally, we've been working hard with operational excellence. Turning to the next slide, showing the financial development, the result of this strategy has given Telenor Sweden a strong financial development since 2009, with growing revenues in mobile.
Fixed revenues have been declining due to DSL and fixed voice, but has now been stabilized with growth in triple play over fiber, both organically and through acquisitions. And a very, very good improvement in EBITDA margin from 20%-30%. Going to slide number five, we now have, we're now the second-largest operator on the Swedish market, bypassing Tele2 last year, being number three in consumer mobile, number two in business mobile, and a solid number two position in fixed broadband, with 23% revenue market share, ahead of Com Hem. Going to slide number six is to give you the overview of our fixed business in Telenor Sweden, with a focus on consumer then.
We have been growing our fixed revenues despite this decline in DSL and voice, with 27%, comparing Q1 2014 with Q1 2013, then included in the Tele2 acquisition from January. Our portfolio consists of broadband, TV, and fixed voice. We're having 675,000 broadband customers, and we have fiber services, we have cable services, and DSL, and an increase of 133 since Q1 2013. On the TV side, we have IPTV, we have digital TV over cable, and then analog TV. 521,000, also showing a very big growth. The majority of the TV portfolio is still analog. We added a lot of TV customers through the Tele2 acquisition.
And then finally, voice, both voice over IP, part of the triple play bundle, and then PSTN. In addition to this, we are selling mobile broadband in our main brand, but no mobile voice, and no quad play. So that's the portfolio and the customers. Going into the market overview then, and I'm now on slide number eight, the most important market trends as we see it. First of all, I mean, the Swedish fixed market is advanced, as I started with, and it's quite dynamic. With, first of all, a good fiber infrastructure since many years back, and what we see now is that the main growth when it comes to broadband is coming in the fiber market. It has been a long period of-...
A multi-dwelling unit growth, over the next years, we will see single-dwelling units, taking over when it comes to the net adds. Decline in DSL and fixed voice, as previously managed, mentioned, and we have had a very clear grow and optimized strategy over the past year, growing fiber and optimizing our DSL and fixed voice business. Secondly, the Swedish market has this phenomenon of closed and open networks, or closed and open business models. I will take you through that structure and what's happening, but it's clearly a continued growth of open networks. We've seen some, consolidation over the last couple of years, where communication operators have been acquired by ourselves, by Telia, and then we have Com Hem.
So now, basically, the open market is controlled by integrated operators like Telia and Telenor and Com Hem, which will mean a stabilization of the market. A lot of things happening in TV, of course, Sweden being very advanced with a high take-up of Netflix, and others, but growth coming from IPT over fiber as well. And then finally, we have no quad play in the market, but there are early signals from Telia, with the creation of a Swedish organization and recent CEO communication, talking about quad play. More based on improved customer experience of fixed mobile and TV, not discounting. And also clearly stated in Com Hem, in the introduction on the stock market, that this could be an opportunity.
But, we don't see any attractive M&A conditions, for Com Hem. But clearly, Telenor has a very good position, both being a fixed and a mobile operator, to respond should this happen over the next years. So some, some indications. Okay, handing over to, or going on to slide number 9 then. The total market, the total switched fixed market, including TV, has declined from some SEK 25 billion to SEK 22 billion in, in, in the forecast for 2014. You see a major decline in fixed voice, fewer subscriptions, and the decline in usage due to mobile price plans. DSL declining, when fiber has been built out and 4G has been built out, and then, a TV increase in triple play, deal with telecom operators. Next slide, looking at, the development by access form.
Fiber is now a very important access, with roughly 25% of Swedish households having a fiber subscription. We have 4.5 million households in total. So that means that, roughly 50% of Swedish households can get the fiber access. Fiber has been built out to multi-dwelling units. We now see a start of a build-out to single-dwelling units, primarily by Telia. And then we have roughly 150 metro networks, owned by municipalities or energy companies building out, fiber as well, but having an open network model, meaning that service providers can sell services. Cable has declined somewhat since in Sweden, roughly two-thirds for cable is overbuilt with fiber. DSL declining considerably when fiber has been built out and 4G. But we see a flattening of that now, particularly in rural areas.
The next wave will be, SDU built out. We have a penetration today of MDUs of 75%, and only 50% of SDUs being built with fiber. So that's the next growth wave in Sweden. Going over to open networks then, slide number 11. You see, on the slide, total homes connected with fiber in Sweden, and the red part being the open networks, and the share of open networks increasing over time. More than 50% are now open. This model was established, some 10 years ago. Large public real estate owners wanted to have open networks with freedom of choice for the tenants.
The reason for the growth now is that Telia has entered with an open model. There is also some closed networks that are being opened up. And this model is, as you probably are aware of now, a model where the landlord makes some of the investments, and then has a communication operator to manage the network, having ISPs selling to the end customer. Very few Triple Play offerings in the networks, so a lot of single-play ISPs. Consolidation taking place, and now controlled basically by Telenor, Telia, and Com Hem. Going to slide number 12 then, just to show you the fiber customer base by each player and the growth that we've seen in 2013.
Pretty much three players, or sorry, two players dominating, fiber is Telenor and Telia, since we now have acquired Tele2. A couple of big single play actors like Bahnhof, AllTele, Com Hem being into fiber, but very small. And then there are a number of small ISPs, a consequence of the open model. There are roughly 90 service providers, having roughly 150,000 connections, but each and every one of them being quite insignificant. So a rather concentrated market, could be room for additional consolidation of some of the the mid-sized ISPs over time. And then finally, if you go to next slide, fixed revenue growth, looking at the performance in terms of revenue growth, these are our reported numbers for everyone, but Telenor, we have included our ex-acquisitions, retroactively.
We can see that Telia has been having negative growth. They have a strong position in DSL, TV, and rolling fiber, but still negative due to the big six portfolio. We have clearly turned our negative trend. We had a few years with negative growth, very close to zero at the moment. Tele2 exiting the fixed business, very weak growth with their remaining DSL and voice. And then Com Hem going from high growth numbers to a period of slower growth, losing TV customers and customers downgrading, but they're now showing some better customer growth numbers, as you are well aware of.
All right, so that's the market overview, and I assume that you will have questions in the end of the structure and so forth. I go over to the Telenor strategic focus on slide 15, and I'll start with our brand portfolio. And we have two main brands. Bredbandsbolaget is the main brand with a premium position based on a very long history, very strong brand. We have good awareness and high consideration. And the brand promise is to give a great experience. Our target group are maximalists, modern, progressive, high spenders, roughly 25-45. And the brand is associated with high speed, innovation through partners, and very satisfied customers.
And we've been winning the Swedish Quality Index for a number of years, and have a very good NPS, and particularly in the fiber service. And then we have an attacker brand, which is Ownit, acquired two years back. We use that in the takeover market, smaller MDUs, particularly in Stockholm, Gothenburg, and Malmö. Very good company and a strong brand to complement B2. And then we have a number of other brands which we use for harvesting DSL, like Glocalnet, and we still have analog TV with Canal Digital. But over time, it's B2 and ownit that we are investing in. Going to slide 16 then, and our growth strategy in the consumer fixed business.
On the left-hand side, you see the development in our fiber universe, i.e., homes connected, and then we have our market shares. And we have, with our growth strategy, based on acquisitions and organic sales in fiber, almost doubled our fiber universe, going from 395,000 homes connected to 730,000 homes connected in Q1, through the acquisitions of OpenNet, Ownit, and Tele2's fiber business. So we have a very solid position, both in terms of universe and market share, being the market leader with 34% fiber market share, clearly ahead of Telia. And we have also, through this, increased scale in TV, we were clearly subscale a number of years back.
Now we have 18% market share, including BTH, so it's a number two position after Com Hem. So all in all, a strong focus on growing our high-speed broadband position and TV position over the past two years. Going to slide number 17 then, our main strategic focus for 2014, taking into 2015, in three areas, internet for all... We are focusing a lot on increasing our penetration at the moment, and that goes for fiber, and of course, the cable TV business that we bought, and increasing ARPU. We do this through a number of measures, collective agreements in smaller MDUs.
We also see an opportunity in some cases to go from closed networks to open networks, that clearly has an opportunity, often involving actually closing down the cable network, meaning that fiber penetration goes up quite a lot for B2. We are working very hard with increasing our output, both through upselling on speed and triple play, but also increasing prices. The demand for higher speed and due to the ever-increasing demand for OTT services and so forth is clearly gives us opportunity to increase prices as well. Expanding into open networks, something that we do with our own open network, Open Universe, but also in external open networks. We are now in universes of roughly 600,000 homes connected.
Improving TV offering, I'll get back to that. And then finally, developing a single dwelling unit offer for fiber. We haven't entered into Telia's open model. I think the margins are too low, and the processes are not good enough. But we rather work with local loop unbundling on fiber, which is possible in Sweden, where we are working on a number of pilots, actually using our advantage of being present with local loop unbundling on DSL. So that's a very important initiative that we have. Efficient operations, integration of Tele2, priority number one, and we are on track with that integration. That will be finished in 2015, first half. And then loved by customers, NPS being a very important tool for us, been working with that for quite some time.
And then, of course, keeping our customer satisfaction at a good level, working hard with that, making sure that customers are on the right price plans and so on. So that's our strategic priorities as a whole. And then going a bit more in detail on the TV part, slide number 18. We have a high ambition to strengthen our Triple Play position. Still, only having a minor part of our customer base on Triple Play, including TV. You can see the illustration in the left-hand corner. TV bundling in new sales is, particularly in fiber, is very strong. And of course, we can improve our ARPU, but also retention. The investments that we're making in improving our TV offering are in a number of dimensions.
We have introduced a new packaging last year, which is more attractive and also a lot simpler. We have our own packages and our own content agreements, and now we're selling premium packages to C More and Viasat through revenue share agreements. We are about to launch our new IPTV platform in the second half of 2014, based on Ericsson, to be on par with competition for functionality. We are also working in a roadmap with multi-screen next year, and also SVOD services. Today, we have transaction VOD, but we don't have an SVOD service integrated into our set-top box. There are also some exclusivity deals that Com Hem has with Netflix that will be concluded this year.
So there will be more opportunities in 2015 for those type of convenience services integrated into the set-top box. So all in all, trying to improve the TV offering considerably, increase the penetration of TV in our base. So all in all, to conclude the presentation, the consumer fixed business is a very important area for us. We have created a good market position for the future. And we hope to, over time now, really be able to challenge both Telia and Com Hem in this area. So with that, I would like to open up for questions, and we can go back to some of the slides if you'd like to. So please, go ahead.
Thank you. If you would like to ask a question, ladies and gentlemen, please press star one on your telephone keypad. The voice prompt on your line will indicate you when your line is open to ask a question. Please state your name before posing your question. Again, please press star one. We will now take our first question from Jacob Bluestone, Credit Suisse.
Hi, good morning, and thank you very much for the presentation. It's very interesting. I've got two questions, please. Firstly, could you talk a little bit about the evolution of pricing trends and whether you know, is ARPU for your customer base in fixed line, is it going up in fixed or down? So are you seeing rising ARPUs as more people move to triple play? Or are you seeing pressure on ARPUs because of things like OTT cannibalization? So any color on the pricing and ARPU development. And then secondly, you mentioned LLU on fiber. I just wonder if you could maybe expand a little bit on this. So for example, what is the wholesale price for fiber LLU?
Yeah. Well, so with the, with pricing them, I think we see good pricing development in general. First of all, customers are demanding higher higher speeds, which in itself is a good thing. But also the consolidation, consolidation that has been occurring over time. So there are fewer big player and more premium brands like Telia, Telenor, and Com Hem. So on the broadband product in itself, whether it's DSL or if it's fiber or if it's cable, pricing trend has been very positive, I would say. And then, talking more about our own products, clearly, triple play is an ARPU improvement. The penetration that we have still with fiber and IPTV is quite low. And our bundling rates are very good now.
More than 50% of our new sales are broadband and TV, of course, improving ARPU. So far, the OTT cannibalization has been low. I think we can foresee it to some extent in new sales of digital TV and premium packages on cable TV. But not having an impact on our ARPU on IPTV. So people were downgrading some premium packages, but overall still a positive ARPU development in general. Then there are mixed effects, of course, when you look at the reported numbers, but all in all, a positive trend. So that's on the pricing side. Any follow-up question on that one?
Nothing, that's, that's very clear.
Actually, I could add one more thing, which is more of a, that's also in the open model, where we have a number of ISPs, and I mentioned a few of them, Alt, Telia, Bahnhof, and the other one, the other one, too. They've been registered not in Sweden, but on Malta and countries like that, not having to price including VAT. That has now been abolished by the Swedish tax authorities, putting also another, putting prices up actually in the open models, which is beneficial for profitability. Okay, taking then Local Loop Unbundling and fiber. I mean, there are basically today two ways of working with fiber to SDU.
One is through the metro networks, where we can, it's possible to rent fiber in their open networks, and then through Skanova or Telia. And Skanova has their open model, which we are not part of, and actually none of the big players, not Com Hem either, being part of Telia open fiber. Low margin, CapEx light, but the process is not being great. On the other hand, there is an opportunity to rent fiber in the local loop unbundling model, being in the Telia station. And just to give you an indication what type of margins that you can get through that, and it's a regulated price, you can get, you know, 55%-60% cost margin. So that actually makes it into a healthy business.
The only issue with it, that Telia has a first-mover advantage. So they, they enter into an area with single-dwelling units, they roll out fiber, and they can get a good penetration, whereas we cannot be there on the first day, selling at the same time as Telia, meaning that the penetration will be lower on our side. So that's a topic that we are in discussion with the regulator about. So on one hand, it's an opportunity, on the other hand, the penetration will not be as great. For Telenor, it's a big infrastructure advantage to use the Local Loop Unbundling station, since we are already present and we have fiber to the stations. Any follow-up questions on that one?
Yeah, if I can-
I think-
On your homes connected, I mean, you sort of showed a slide where it looked like most of the growth in your homes connected had come through acquisitions. So if you could maybe just comment on, do you actually intend to deploy for further fiber infrastructure yourself, or do you see most of it coming through some future consolidation? I think you mentioned that there could be-
Yeah
Consolidation among the smaller. Did you mention that?
Yeah, there could be consolidation among the smaller ones, but those are mostly present in open networks. What we're doing is we've been acquiring three companies, adding homes connected, also OpenNet, Ownit, and now Tele2's fiber and cable business. But we are also selling organically to multi-dwelling units, adding additional homes connected. And I will not go into the details of the number of net adds to that, but there will still be a growth in multi-dwelling units in the market. New build houses and still penetration is 75%, so there are opportunities to continue selling organically to multi-dwelling units for us. But of course, the growth in that part will decline over time, and growth will increase in single-dwelling units.
When it comes to acquisitions, I mean, we're working with the Tele2's integration at the moment, and that is our focus.
Thank you very much. That's very helpful.
Thank you. We'll now take our next question from Henry Leigh , Goldman Sachs.
Yeah, good morning. Thanks also for the presentation this morning. What was, I guess, slightly at odds with what we're seeing across Europe is there was very little commentary on Quad Play. So I just had an... Which is strange, given that yourselves and Telia are presumably in quite a good position to push that as a competitive advantage. So I just had a couple of questions, actually for you. So just answer which ones you can and which ones you want to. But I just wondered if you could just talk about your ambitions on Quad Play. You know, what benefits do you think Quad Play can bring you?
And in the competitive side of things, do you see Telia's management structure shift as a prelude to a more aggressive convergent push? Is that a risk to you, and will you change your management structure to follow that? Thank you.
Yeah, of course, we're following this very closely. The development is with Europe and France and Spain and Portugal and Germany and so forth. So far in Sweden, we haven't seen anything happening. Then I think Telia has been preparing by going into a Swedish organization, and at least what we've been listening to is that there could be potential quad play activity by Telia, but more based on giving a good customer experience, fixed mobile and TV. And of course, Com Hem could. I don't think there is a high priority on quad play right now, but over time, if that is interesting for them.
When it comes to our own strategy, I mean, we have, since many years back, been selling mobile in Telenor and broadband primarily in the Bredbandsbolaget. We have a very good position now with a strong, fixed infrastructure, and a good mobile position to respond, should this happen. But, looking at the market development in some countries, this has to be done in a very careful way, creating value, and not a lot of discounting. So that's our view. I mean, no concrete plans on it at the moment, but in a very good position to respond.
Can I just ask—thank you. Can I just ask a follow-up question there? I mean, is that an issue that you're selling mobile through your Telenor brand and fixed through Bredbandsbolaget? Is there a brand concern in terms of selling a quad play product? I mean, which brand would you sell it under?
No, well, I mean, we haven't concluded on that in any way. We have a very strong brand in the Bredbandsbolaget, and an upcoming and increasingly strong Telenor brand. How we will. If Telia or Com Hem launches and how we will, how we'll respond to that, if it's in one brand or dual brands, we haven't concluded, and we haven't, I don't know, made all the detailed plans around that. But we have the opportunities. We can do it in both brands. We can do it in a single brand.
Okay. Thank you.
Thank you. We'll now take our next question from Thomas Heath, Handelsbanken.
Thank you. Thomas Heath here with Handelsbanken. Thanks for your presentation. A few questions, if I may. Firstly, on the TV side, you mentioned-
...some early trading down to more basic packages, as, as people add on, Netflix and Viaplay and so forth. Just curious, if you integrate Viaplay and Netflix, do you, do you see any real value in money terms for you? Is it more of a service to subscribers? So if, if this trend picks up, that people have a basic package and then add on these third-party services, what would happen there? That's the first question. Then, secondly, on, on broadband and the access business, customers can save quite a lot on cost in, in MDUs if they group negotiate in Sweden, and often you can, you can cut your cost by half by picking Ownit over Com Hem, for example, as, as you alluded to.
Could you say anything about the trends there? Is that picking up, or what sort of rates are we seeing? And when a house switches to, say, Ownit, does everyone sort of disconnect Com Hem instantly, or do some stay on in a vertical model with the former provider nonetheless? Thank you.
When it comes to value add, in OTT services, there is clearly an opportunity for us in our platform to integrate Netflix or other OTT players. Since we have a quite low penetration, there is rather an opportunity to have the basic package to IPTV and then put an OTT service on top of that. Of course, it depends on the contract and agreements that you have with the OTT player. There is a revenue share model for that. That in itself could be interesting for us, because currently we have a rev share on the premium packages through C More and Viasat, and if we sell that, or we sell an OTT service, bottom line, it's not a huge difference to us.
But it could be a very big, big difference for C More or Viasat, of course. So, and, and I think over time, convenience is gonna be quite important when it comes to the OTT services. So, for Telenor, more an opportunity than a threat. Then, of course, we will have some, some, downgrading on the cable TV part, but all in all, it's more an opportunity than a threat for us. And then you have a very good and healthy increase in the demand for capacity, giving opportunities to increase ARPU through speed. That we see clearly. So that's the TV question. When it comes to collective agreements, then we've had a strategy both in B2 and, and Ownit had it as the foundation of the business model.
Have collective agreements to get 100% penetration, and the trade is down the lower ARPU. We see that trend continuing for smaller MDUs, particularly in Stockholm, where Stockholm has a great network for that and some competition. But it's healthy business for us. When it comes to disconnection of cable TV, there's still a lot of different models. Some would like to keep it, particularly in the larger buildings, where you would like to have a must-carry still. But of course, smaller MDUs, you can disconnect. So but, I mean, the trend is not clear yet when it comes to disconnection of coax. But the clear trend for collective agreements is quite clear.
Could you follow up there on Allmännyttan, the public housing associations? They've been pretty clear historically that they want to switch into open models, but perhaps you could say something about how long that has progressed. There were some big shifts happening in Gothenburg recently, but I'm not sure about the rest of the country.
Yeah, I mean, that's the reason why we have a penetration of more than 50% of the open networks, and that is driven by the state. Framtiden in Gothenburg was a big one. We did it in Uppsalahem as well. And there you see a disconnection of cable TV.
Mm-hmm.
And was much higher penetration of close to 100% of fiber having the must-carry TV over IP. We just continue.
Thank you very much. One last question, if I may, on the cable business. I believe you tried to sell this to Com Hem a few years ago. What are your thoughts on that business now, and is that something you know that might be more possible in the future than it was back then? Thank you.
Canal Digital cable was a part of Canal Digital, including satellite. It was scale, there was still an opportunity for penetration. Com Hem, with acquisition, were not allowed to. What we decided to do then was to keep it, use it. Now it's an advantage for us, both in terms of-... Some landlords would like to have both fiber cable and keep the analog. We also now, when we have the Tele2 business, when we have boxes, we will look into using that technology when it makes sense. And, maybe update it to few parts of the old Canal Digital network even, so actually using it. So we will be more technology agnostic in that sense.
Okay, thank you. Thanks very much.
Thank you. We'll now take our next question from Terence Tsui, Morgan Stanley.
Yeah, good morning, everyone. I've got three, hopefully, quite brief questions. Firstly, just on broadband. Can you just give us an idea of the sort of speeds you offer across your network? And, looking at your broadband customer base, how that's split between different various broadband speeds, i.e., how many on 10 meg, and maybe how many on 100 meg or more. Secondly, I'm interested in just taking a look at triple play penetration. You had the slide where you showed the fiber customers, less than a quarter take a triple play. Why do you think it's been so low historically in Sweden? And do you think going forward, Sweden will be a truly triple play market, say, like in the UK or in Germany?
And then just finally, looking at your set-top box, how do you think it stacks up against the competition in terms of functionality? One of the advantages that one of your competitors offers over-the-top being integrated within the box. Do you think this is a key differentiating feature that's gonna drive, you know, new customer gains or losses going forward? Thank you.
Okay. When it comes to speed, we of course, we need to talk about fiber and, and DSL, separately. After we talk about the most interesting part, which is fiber. We've been, very successful in, in, upselling on, on speed. We have a, a strong infrastructure, and we can provide, gigabit services throughout the network. On the advanced market, which, which has been well known for speed, I mean, more than 50% is above, a 100 meg. So that is, that is very good.
In the acquisition that we just recently made with Tele2, they were not as, I mean, the penetration of high speed wasn't that well developed, so there we see an opportunity, both on the fiber part and on the cable part, to upsell even more. When it comes to DSL, I mean, it's still, we have some VDSL. We will not build that out more. We give the customer the best possible speed, as you know, so it's mostly on 24 meg. So that is the situation on speed. And we actually see some demand for 250 meg and 1 gig connections as well, driven by multiple devices, by HD, and also OTT.
That maybe leads me into the Triple Play question and then the set-top box question as well. Yes, Triple Play is quite low. We've been selling broadband, voice over IP. I think voice over IP will decline, whereas TV in part of a Triple Play package will increase. Partly, the answer to your question is due to the cable TV penetration and fiber being overbuilt with... Oh, sorry, cable being overbuilt with fiber. So in one building, you can have Com Hem providing Triple Play, and then there have also been, you have to have analog must carry as well. So people haven't been buying Triple Play from Com Hem or B2.
I think there will be great opportunities to increase triple play penetration, particularly if you then integrate OTT and make it very convenient for the customer to have that. Maybe the sales of the premium packages, as we've seen traditionally, will be lower, but on the other hand, you have a very convenient OTT integration. Our platform with Ericsson and the set-top box that we are putting out now during the fall will enable integration. Our ambition is to have a very good functionality on par with competition. Of course, a bit different than TiVo. TiVo is TiVo, and Ericsson is Ericsson, and there are differences. But when it comes to the important functionality, it's on par, including OTT and multiscreen. Maybe a bit smaller, which is appealing to at least Swedish customers. All right?
Great. Thank you.
Thank you. We'll now take our next question from Maurice Patrick, Barclays.
Oh, hi, guys. Yeah, Maurice here from Barclays. A couple of questions from me. First one on the- ... I'm curious about the SDU rollouts. You talk about that as a sort of area for growth. Obviously, common estimate that a third of the MDU coverage region isn't overbuilt with fiber, so why wouldn't you consider that giving a better payback? Just some more sort of thoughts around the economics of overbuilding MDUs rather than pursuing SDUs. The second question is, when talking about the recent fiber growth, you highlight the opening up of closed networks. Curious to see how much of that is mainly sort of the closing of vertical land contracts ending and moving towards open models or perhaps cable, cable disconnections. What might incentivize landlords to sign a new closed contract rather than opening up? That'd be great. Thank you.
Yeah, first of all, when it comes to our own strategy, we are still seeing growth in MDUs. I mean, with 75% penetration, there will still be net adds coming from organic MDU rollout, both, you know, market-wise and from ourselves, and we will continue doing that. SDU volumes from our side are gonna be quite low over the next year or so. We need to find a good model with Telia that is scalable before we can see good volumes in that. But from a market perspective, over time, of course, SDU will be important. Open networks, the economics for doing that, as I think I answered previously, the trend has been extremely clear, and that will continue.
There is from our side, it actually, in some cases, makes financial very good sense to open up. Because if we have a cable disconnection at the same time, and we don't own the cable, penetration will increase. B2 will have more fibers connected, and then we will have other ISPs, you know, taking the rest for hopefully getting us up to, you know, 90% penetration instead of 40% or 50% fiber penetration. If you take the landlord perspective, I mean, it depends on how the economics will play out, because they are getting paid from B2 or Com Hem today, based on number of connections, and it, you know, it could depend on the price for that.
But all in all, I think, at least in large real estate, within large real estate owners, the trend for going from open to closed networks will continue, and it could involve cable disconnections.
Okay, thank you so much.
Thank you. We'll now take our next question from Tatu Ristimaki, Merrill Lynch.
Yeah, thanks, and good morning, everybody. I really had one question, which is that, how much revenue and risk do you still have from the remaining BSL and voice business? And, and kind of tying into that, you talk of increasing the Triple Play adoption, but what is the real kind of willingness of your customers to ascribe value to the fixed voice, and, and actually, what is the ARPU trend that you view to the fixed voice part? Thanks.
I think the, the major hit has been taken, on, on the SL and voice. I will not go into data numbers because we're not reporting on that, but you can, of course, look at, our market shares have been developing on, on DSL. It will be a flattening, because what has happened is that fiber has been built out in the most attractive areas where we have had Local Loop Unbundling. And also the fact that there have been heavy caps put on, mobile broadband. The incentive, to change from DSL to mobile broadband has been, lower. Fixed voice, on the other hand, is going rapidly down. You see the market trend, and that is the same for us.
I think it's only 50% of Swedes in the age bracket 20-45 that still has a fixed line, and usage is clearly declining. So that part will continue, and will be less and less important. And then I'm not sure if I answered all your questions in that respect. Maybe I missed one, but-
No, I suppose what I'm trying to square off is you talk about Triple Play being a great opportunity. I'm trying to figure out, are you really talking about increasing TV and broadband rather than should we-
You will not expect. I mean, you can almost call it dual play, broadband and IPTV in combination. I think we've seen penetration on voice over IP will not increase as part of this. Quite a few households keep their voice subscription but do it more for a security reason than anything else, not really using it big time. So that's, I mean, the Swedish development, where you have voice included in your mobile package, basically. So it's a dual play.
... Yeah. Okay, then if I just actually remember another quick question. If the market goes into Quad Play, would Com Hem be able to get a decent MVNO agreement, or meaning, meaning is there any regulatory support for them in going to a network operator and saying, we want an MVNO agreement, or would they be on the back foot in a market situation like that?
No, there is no regulatory obligation for anyone to provide any MNO conditions that are attractive. That all depends on market dynamics, basically. As far as I know, no one has been providing them with good MNO conditions yet. If you look at the markets throughout Europe, the ones that are losing are pro mobile, and now you have two integrated players at the moment, and those are Telia and Telenor. And then you need to figure out the dynamics, basically.
That's great. Thanks very much for that.
Thank you. We'll now take our next question from Ulrich Rathe, Jefferies.
Yeah, thanks very much. I have two questions, and one is on consolidation. What is on the regulatory agenda there? I mean, for example, when you did buy Tele2, but also if you look into potential and further consolidation scenarios, do you think we are very close to a sort of pain threshold here from the regulatory authorities, or are they essentially just well stamping this in, you know, in the perception of a relatively well-functioning competition in a competitive market with the players that are there? Just wondering what sort of the general position there really is.
And the second one is, I understand the focus today is on B2C, but could you just maybe sort of put the B2C versus B2B efforts of Telenor in Swedish fixed a bit in context, in terms of the relative size and the relative importance for future growth? And, you know, is most of the growth that you put into your business plans at the moment more from the B2C side, for example, or more from the B2B side, or any additional color on the relative mix? Thank you.
I will only talk about fixed consolidation. There has been a wave now of consolidation that I think has been beneficial for the market. I mean, there are still opportunities, looking at the fact that there are a number of fiber players still on the market that are mid-sized or even some scale, but they're all wholesale-based, basically. So most likely there will be a big player consolidating and taking out the economies of scale in that respect, and that could definitely continue. The other part of consolidation is on the metro network side, where Telia has been buying a few smaller ones, effectively preventing IP-Only EQT to make those acquisitions.
So Telia has been determined to keep them out of the market, and those are small acquisitions, and there has been no regulatory issues or competition authority issues in that respect. So I think over time the fixed Swedish market will continue to consolidate. And then cable TV is of course a different story, because Com Hem is very dominant. But it all boils down to market definitions over time and what will happen. So that's consumer fixed consolidation. When it comes to business to business and our position, we have a very strong mobile position. We also have a fixed part of our offer in enterprise and SME. On the enterprise side, it's very important to be fixed and mobile.
A lot of the big contracts are including mobile and fixed voice, but also IPVPN, and we're competing with Telia. On that market, it's Telia, it's Telenor, and then it's TDC. TDC is basically a fixed provider with an MNO agreement, but not being very competitive on mobile. So there on that part, the business to business is very important to Telenor. It's profitable, and there are growth opportunities in that side as well. We're also present in SME. We noticed that Com Hem has entered the SME when it comes to fiber broadband. We've been there for a long period of time, and we will continue to compete in that segment.
I think we'll have one more question and then have to end the call in respect of time and also Mats' voice, I think. Okay, so one more question, please.
Thank you. We'll now take our last question from Peter Nielsen, Kepler Cheuvreux.
...Thank you. I'll take two quick ones, please. Firstly, you talked about content, Mats, for TV. How do you see good competition on content in Sweden at the moment? And how are you positioned? And do you see issues such as the major sport rights becoming more of an issue, more sought after by yourselves or your main competitors going forward? And just secondly, the Tele2 acquisition, in itself, it was not a particularly profitable business for Tele2. What do you expect to do with that? Clearly, there should probably be some dilution to your margins from that. But what do you expect to do with that over time, and when do you think we'll start to see some of the synergies which I presume you're expecting from this acquisition? Thank you.
Yeah. Well, on the content side, I mean, we're basically we have our own content agreement for basic TV and those packages. When it comes to sports rights, we're not investing those rights are on our own. That is, C More and Viasat on the Swedish market. And we are a distributor in a revenue share model, basically. But overall, of course, the prices on content and particularly sports rights, they've been increasing. We see that we're part owner of C More, and C More have been struggling, paying a lot for both sport rights and film rights. But for Telenor, I mean, we have what we need.
We're focusing a lot on securing rights for catch-up, start over, multi-screen, and stuff like that, so we can give our customers a good experience, basically. On the Tele2 acquisition side, yes, it's- it wasn't super profitable for Tele2, but we- it was also subscale. We have the scale, and the fiber part is, you know, a perfect geographical addition to our business. When it comes to the cable part, it will also give us scale, on coax, adding DOCSIS as an opportunity. It was actually well invested, and we were a bit surprised when we looked into the case, both on the fiber and the cable TV side. Yes, there will be dilution this year and possibly next year.
We're doing all the integration work now, so you will- you can expect to see a good development in 2016 and going forward. And, I mean, from our perspective, I mean, margins are good. It's all about putting this into our platforms, running this with our organization. We took out the first synergies, actually this month, laying off 22 people. So all in all, we're on track when it comes to the integration of that business, and it's gonna be profitable for us. That was the point.
Okay, that's useful. Thank you.
Okay, that was the final question. Thank you, everybody, for taking time to join us for this call on the Swedish fixed market. Thank you, Mats, for being very good with handling all the questions from the analysts.
Thank you very much.
Okay.
Thank you. That will conclude today's conference call. Thank you for your participation, ladies and gentlemen. You may now disconnect. Thank you.